What is Operating Margin?
A measure of profitability that tells the proportion of revenue that will eventually become profit for a company. The formula for calculating operating margin is Operating Income divided by Revenue. As such, Operating Margin is a measurement of what proportion of a company’s Revenue is left over, before taxes and other indirect costs such as interest expense, nonrecurring items (such as accounting adjustments, legal judgments, or one-time transactions), and other income statement items not directly related to a company’s core business operations. Also sometimes referred to as Return on Sales.
OTHER TERMS BEGINNING WITH "O"
- Operating Agreement
An operating agreement is a document describing how a limited liability company (LLC) will carry out business obligations between its owners. Many states in the United States require an LLC to have an operating agreement. LLCs operating without an operating…
- Operating Income/Operating Profit
When analyzing staffing firms, Operating Income is regarded as a good measure of ongoing business performance as it calculates profit before items such as taxes and other indirect costs are included. Operating Income is frequently referred to by the acronym…
